August 22, 2010

Capitalogix Commentary for the Week of 08/23/10

We are in the dog-days of summer. Perhaps it is a good time to travel, just so you are not tempted to watch the news.

Biggest Negative Fund Flow Out of U.S. Stocks Since During the Crisis.

Money is flowing out of equity markets into the bond market. According to the NYTimes, investors withdrew a staggering $33.12 billion from domestic stock market mutual funds so far this year.

In the chart, below, the red bars represent fund flows for U.S. equity mutual funds, and the gray bars represent fund flows for bond mutual fund. The data for this chart is based on the fund flow data of long term mutual funds tracked by the Investment Company Institute.

Likewise, according to Rasmussen research, consumer & investor confidence has fallen to a 2010 low.

The Consumer Metrics Institute's Growth Index.

It's easy to get distracted by other data, but (for the most part) price is the primary indicator to use when analyzing a stock chart. Of course, it's still useful to try and get an early indicator of how a well-followed metric may perform.

The chart below shows three different data points. The S&P 500 index, GDP, and the Consumer Metrics Institute's Growth Index. Historically, the Growth Index has given an early indication of what GDP and the stock market are likely to do soon after. So, its recent decline might be an early indicator of continued weakness.

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We are in the dog-days of summer. Perhaps it is a good time to travel, just so you are not tempted to watch the news.

Biggest Negative Fund Flow Out of U.S. Stocks Since During the Crisis.

Money is flowing out of equity markets into the bond market. According to the NYTimes, investors withdrew a staggering $33.12 billion from domestic stock market mutual funds so far this year.

In the chart, below, the red bars represent fund flows for U.S. equity mutual funds, and the gray bars represent fund flows for bond mutual fund. The data for this chart is based on the fund flow data of long term mutual funds tracked by the Investment Company Institute.

Likewise, according to Rasmussen research, consumer & investor confidence has fallen to a 2010 low.

The Consumer Metrics Institute's Growth Index.

It's easy to get distracted by other data, but (for the most part) price is the primary indicator to use when analyzing a stock chart. Of course, it's still useful to try and get an early indicator of how a well-followed metric may perform.

The chart below shows three different data points. The S&P 500 index, GDP, and the Consumer Metrics Institute's Growth Index. Historically, the Growth Index has given an early indication of what GDP and the stock market are likely to do soon after. So, its recent decline might be an early indicator of continued weakness.